But
when I ask Sales executives and Sales trainers how their current sales
training program is aligned with their sales performance issues I get
the look of 'No speak English'.

Let's
first categorize 'Sales performance issues'. There are (4)
distinct sales performance silos that will effect the overall outcome
of any sales team, year in and year out. They are:

% of Sales reps to Quota

Average New-hire Ramp-to-Quota in months

Sales Employee Turnover rate

Time spent versus Result achieved

This
is a good place to start in determining what sales skill training to
implement to achieve a measurable return on investment. But here's
what will set you apart when you walk the request up to the front
office. Start out with the NUMBERS.

That's right. Take a diagnostic view of your current sales performance silos, one by one.

The
company was hiring 155 sales reps per year. The ultimate objective
of any new-hire sales training program is to ramp the new sales rep to
Quota. Simply, give them everything they need to effectively reach
their monthly sales goal.

So
how was this company doing? They were obtaining this ultimate
sales training program objective in 7 months. So how does one
determine if that training outcome is a 'Sales Performance
Issue'? Let's take a look.

Step 1: 'Run the Numbers' for any realistic ROI opportunity

Each new-hire rep had an ultimate quota of $3500

Sales Cycle was 17 days

Average customer term agreement of 36 months

Average \'Sub-Quota\' revenue per month during ramp of $1300 (This number reflects the average monthly revenue a new-hire achieves before they achieve quota attainment)

Step 2: 'Run the Numbers' hypothetically for a 1 month improvement

In
this case, I showed the sales management team what return on investment
they would get by helping just 1 sales rep achieve full sales quota in
6 months versus 7 months. Based on their numbers my diagnostic
system showed them a ROI of $79,200 just by trimming off 30 days. If they did that for all 155 of their annual new-hires, they could realize $12,276,000.

And that got their attention. So, is it now a worthy sales performance issue to attach pin-point sales training to? Not quite yet.

Step 3: 'Run the Numbers' for a Reality Check

The
most successful businesses - and certainly, sales departments - have
identified their Key Performance Indicators (KPI); individual gateways
that directly effect the outcome of a particular process. Then they
measure the competency ratios in line with them.

A
good KPI example in the sales process might be how many times you
advance the first sales appointment to the next phase, whether that's a
demonstration, a site visit, a survey or a proposal. Another KPI is how
many times you gain a new customer once the first gateway is passed.
And when you do gain a new customer, what's the average revenue you
achieve? And how long does it take to gain a new customer on
average; i.e. sales cycle?

How
about how long it takes you to gain 1 new sales appointment, defined by
sales prospect 'conversation'? And as a by-product of all this,
how many new appointments are needed each week?

We
ran these numbers in the system to see 'if and where' there were some
leaks in the 'KPI ship'. And here's what we discovered; not a
leak, but a big 'ole fire hose.

Two 'KPI issues' were apparent. First,
why does the ramp-to-quota for a new-hire take 7 months when the
average sales cycle is 17 days? Second, they were only setting 3
new appointments per week when they needed to set 6, based on their
other KPIs. So their sales appointment 'activity barometer' was
only running at 50%. And that will dictate a longer ramp-to-quota.

Dig a bit deeper in the system and out popped a 6% conversation-to-appointment ratio; they had to conduct 15 prospect conversations to get 1 new appointment.

OK,
back to the 'Reality Check'. Is it realistic to focus on reducing
the new-hire ramp-to-quota from 7 months to 6 months for a sales
training ROI of $12,276,000 or $79,200 per rep?

You
bet it is. These folks needed to address the front-end of their
sales process; setting targeted sales appointments. To do that,
they needed (1) establish an activity standard to reach quota by month
six and (2) develop a sales prospecting methodology and supporting
system to spend less time in achieving it.

Then
they needed to plug their sales prospecting 'system' into their current
sales training program and work to a weekly sales appointment activity
goal to assure a monthly revenue result by month 6.

Step 4: Set the Goal and 'Train to It'

A
sales training ROI goal of $12,276,000 or $79,200 per rep is for sure a
worthy one. And the diagnostic system showed us they would meet
this goal just by setting 3 additional sales appointment per week per
rep; 6 appointments versus 3.

Actually,
I lied. The system showed an even brighter picture if the sales
appointment activity standard of 6 new appointments per week was
met. If they could support their new-hires with a sales
prospecting system that could help them achieve 6 new sales
appointments per week, they would actually cut their new-hire
Ramp-to-Quota by 4 months; from the current 7 months down to 3
months.

And that sales training ROI would be $316,800 per rep or a whopping $49,104,000.

One
of the reasons why sales training fails is a failure to define a useful
objective. In this case, our diagnostic method has defined a
single useful objective for them to train to. And this same
diagnostic method can be utilized if you have a 'Sales Performance
Issue' of an unacceptable percentage of Sales reps reaching Quota each month.

In
Part 2, we will take a look at (2) other sales performance issues,
'Sales Employee Turnover rate' and 'Time spent versus Result achieved'
with this same sales management team and see what our diagnostic method
to sales performance improvement and ROI turns up.